Liquefied natural gas (LNG) suppliers are demanding top prices from Israel Electric Corporation (IEC) (TASE: ELEC.B22) for importing gas, according to the bids submitted in IEC's request for information (RFI). The tender was published ahead of the operation of a floating LNG buoy offshore from the IEC's coal terminal at Hadera by the end of this year.
The government has already invested $500 million in the LNG buoy project to ease the country's natural gas shortage and provide an alternative to the Tamar reservoir. However, as "Globes" previously estimated, the cost of LNG is so high that it cannot compete against Tamar, putting the viability of LNG imports in question.
Sources inform ''Globes'' that LNG suppliers are asking around $18 per million BTU, equal or higher than prevailing prices in the Far East, which are the highest in the world. This price is equivalent to over $100 per barrel of oil, which means that LNG imports would cost almost as much as diesel.
IEC said, "The company is in talks with foreign companies for the purchase of LNG cargoes. The company does not disclose commercial information about the details of transactions. When the negotiations are completed, they will be submitted to the authorized parties in the company and outside of it."
Published by Globes [online], Israel business news - www.globes-online.com - on June 6, 2012
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